Our Stock of the Week is ARLO technologies (ARLO). ARLO is a do-it-yourself security camera that was spun off from ubiquitous internet hardware supplier Netgear. The company started by offering simple cameras but is now quickly moving to reinvent itself as a SaaS (software as a service) company. Rather than sell cameras, the company has moved to selling subscriptions to its security services, and in the first quarter of 2021, it greatly surpassed expectations with a 549,000 increase in accounts.
Software revenue jumped 54.8% year-over-year, and eps of a loss of 8 cents was well ahead of estimates of a loss of 22 cents. The company is targeting sustained profitability by the first quarter o 2022 but appears to be surpassing expectations.
Second-quarter earnings are due on August 4 after the market close, and there should be anticipation of another strong report.
Technically the stock has been struggling with the vast majority of small caps, but we believe that the company is at a significant transition point and should confirm that when it discusses its second-quarter results on August 4. Currently, there is some support in the high 5 area but no sustained momentum. Jim Cramer discussed the stock on Mad Money on July 14, which produced a brief positive spike.
As always, we will not chase the open on Monday morning but will look to aggressive trade the stock as it develops further. We are looking for either a low volume pullback to the $6 area or a higher volume move through the moving averages and an attack on the $7 level.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and will buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. directly or indirectly, controlled investment and/or trading accounts containing positions in ARLO. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.